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Informist, Friday, Feb. 14, 2025

MUMBAI – With US President Donald Trump looking to reduce trade deficit with India by exporting crude oil, the near-term outlook for Indian oil companies is largely positive, analysts said. However, these positives could be offset by the depreciation of the rupee against the dollar, which poses the risk of foreign exchange losses. "India imports 80% of its crude oil requirements. India can diversify its crude oil requirement by importing crude oil from the US. This will improve relations with the US," Sumit Pokharna, vice president of Kotak Securities, said.

After his meeting with Prime Minister Narendra Modi, US President Donald Trump said the US could become the biggest supplier of oil and natural gas to India. "The Prime Minister and I also reached an important agreement on energy that will ensure the US to be the leading supplier of oil and natural gas to India, hopefully, the number one supplier," Trump said on Friday.

The cheap Russian crude oil imports were a temporary phenomenon and if the Russia-Ukraine war ends, the cheaper imports from Russia will no longer be available, Pokharna said. The US oil imports to India will be an additional source from which Indian oil companies could buy crude, though additional logistics costs could be a problem, he said.

Analysts expect global crude oil production to rise, which will benefit the Indian oil companies. The US Energy Information Administration estimates that global oil production to rise by 1.9 million barrels per day in 2025, up from 600,000 barrels per day in 2024. The supply growth is likely due to a combination of an increase in production from countries outside the Organization of Petroleum Exporting Countries and allies and the relaxation of the cartel's production cuts, the agency said in its monthly outlook.

The Brent crude oil futures were volatile during the week, rising in the first half and falling in the latter half. At 1446 IST, Brent crude futures on the Intercontinental Exchange were up 0.6% at $75.43 per barrel. The rupee has appreciated from the lows of last week largely due to the intervention by the Reserve Bank of India. On Friday, the rupee closed at INR 86.82 per dollar, up from the record low of 87.95 touched on Feb. 10.

Earlier this week, Informist had exclusively reported that ONGC Videsh Ltd., a subsidiary of Oil and Natural Gas Corp. Ltd., may restart operations in Venezuela. Petroleum and Natural Gas Minister Hardeep Singh Puri said on Tuesday that India may buy more oil from Venezuela as regulatory restrictions placed on the country are likely to ease.

The December quarter earnings were disappointing for major oil companies. Of the six major oil stocks, only Reliance Industries reported a net profit higher than the Streets' view. ONGC, India's largest upstream company, reported a net profit of INR 82.4 billion, down 17% on year, missing the Street's estimate by a wide margin on lower realisations amid softer crude oil prices. Indian Oil Corp., India's largest downstream player, reported a net profit of INR 28.74 billion for the December quarter, down 64% on year.

On Friday, the Nifty Oil & Gas index closed 1.5% lower at 9852.20 points, with 14 of its 15 constituents in the red. Over the week, the index fell more than 6%. All the major stocks in the index fell during the week, with Hindustan Petroleum Corp., ONGC, and Oil India being the major laggards.

TOP HEADLINES
* BPCL signs first LNG sourcing pact with ADNOC Trading
* BPCL signs pact with Petrobras for supply of Brazilian crude oil grades
* RIL incorporates arm in Singapore to set up global capability centre
* ONGC arm-NTPC Green JV to buy Ayana Renewable Power for INR 195 bln
* Modi-led team to US may bat for India-Venezuela oil ops:ONGC Videsh official
* Oil India, Petrobras sign MoU for offshore hydrocarbon exploration in India
* PRESS: BPCL to invest INR 250 bln on gas operations over 5 years
* OPEC secretary general stresses balance in energy sources for security
* Better prices, not goodwill, to bolster usage of biofuels, says oil minister
* ONGC partners with BP to revive production from Mumbai High oilfield
* Rupee Depreciation major risk, import bill may go up - Oil ministry official
* Analyst Concall: Oil India sees crude output reach 4 mln tn annually in FY27
* Earnings Review: Oil India Oct-Dec earnings miss Street view on weak sales
 

Following are the resistance and support levels for the sector's key stocks for next week, as per calculations based on their prices on the National Stock Exchange:

End

Reported by Akshay V. Johnson
Edited by Saji George Titus

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